Market players often think in very stark terms. Up is bullish and down is bearish. But that sort of simplistic thinking tends to lead to suboptimal trading. It is during those periods when stocks are pulling back and "resetting" that the best entry points develop.
A good example today is my Stock of the Week, Forum Merger III Corp. (FIII) . FIII is a special purpose acquisition company that has entered into a letter of intent to combine with Electric Last Mile, Inc. (ELMS).
ELMS (which will be the new symbol when the deal is finalized) is focused on solving the problem of the "last mile" of delivery. This is estimated to be a $1 trillion market and is driven in part by a focus on environmentally friendly solutions such as electric vehicles. ELMS offers a delivery van with a price of around $25,000 and has retrofitted the old Hummer plant in Indiana for production
It is reported that there are roughly 30,000 preorders for these delivery vans with an impressive customer list that includes Walmart (WMT) , FedEx (FDX) , IKEA, Ryder (R) , Best Buy (BBY) and others. The full investor's presentation can be found here.
The FIII stock gapped sharply higher after the deal was announced on Friday and closed near the lows of the deal. SPACs have been attracting an increased level of speculation recently, and there is a greater inclination to a "sell the news" response to a deal announcement, This deal looks quite solid, and once the SPAC speculation cools then real buyers should step up.
On Friday, FIII pulled back almost exactly to the pre-deal high at $12.38 before finding support. That level did not hold this morning and the stock is now looking at support around $12. I've added shares today and will be looking to build this further as it develops.
